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Regulation

Oaktree Capital Management settles with SEC over pay-to-play charges

Oaktree Capital Management (OAK) LP (OAK) reached a settlement agreement with the Securities and Exchange Commission over charges it violated pay-to-play rules, the agency said Tuesday.

Oaktree Capital did not admit or deny the SEC's findings, and agreed to pay a $100,000 fine.

The SEC's Rule 206(4)-5 was designed to address pay-to-play abuses involving campaign contributions made by certain investment advisers or their covered associates to government officials in a position to influence the selection of investment advisers to manage government client assets, including public pension fund assets. Investment advisers cannot provide investment advisory services for compensation to government clients, including an investment vehicle in which a government entity invests, for two years after the adviser or covered employees contribute to political candidates who can influence their selection.

According to the SEC order, between September 2014 and April 2016, three Oaktree associates made campaign contributions to candidates for elected office in California and Rhode Island with influence over selecting investment advisers for public pension plans in those states. Within two years, Oaktree was hired by the California State Teachers' Retirement System and the Employees' Retirement System of Rhode Island.

The SEC also charged Oaktree with similar violations involving the Water and Power Employees' Retirement Plan of the City of Los Angeles, the Los Angeles City Employees' Retirement System and the Los Angeles Fire and Police Pension System.

An Oaktree Capital spokeswoman declined to comment.

In its Form ADV dated March 29, Oaktree Capital reported regulatory assets under management of $110 billion.